How much does Facebook advertising cost?
The answer is... it depends on your budget.
And that is but one of two separate cost components in Facebook advertising that business owners should understand.
How much advertising budget can I start with?
Facebook allows you to run ads for as little as $3.50 a day.
To put it simply, you can run Facebook ads for as little as $105 a month which is easily attainable for anyone running a business.
Now the big question is...
How much should you dedicate as ad budget?
Your ad budget allocated should be sustainable and last long enough for your advertisements to achieve peak performance.
A good benchmark to have for larger companies ( 5 million annual and above ) are between 6% to 12% of annual revenue whilst younger companies may have to spend between 12% to 20% as they are in the growth stage.
How is this revenue figures obtained?
It does take a while to build strong digital assets, brand recall, word-of-mouth and an educated population before reaching a stage where you can decrease your ad spend.
Thus, young companies always have to spend more than established companies.
Once you find a comfortable amount where you can market without worrying about not being able to pay your employee's payroll. Take that amount and divide it by 12 to get your base monthly advertising budget.
Dedicate 1-2 month worth of that budget to testing all possible audiences, copywriting and images before massively scaling up your advertisements.
If you find a winning advertisement that generates a consistent return of advertisement spends, you can use the profits from that ad to scale up that advertisement.
How is the management fee calculated?
The management fee is the amount you pay to the agency to create the design, copywriting and executing your ads with precision.
On the other hand, there is also the advertising budget, the fee that you pay to Facebook to bid against other advertisers for the user's attention.
Digital marketing agencies do not earn this fee, their goal is to lower the fee you pay for each successful customer acquisition.
Now that you understand the major difference between this 2 pricing components.
I guess you are more interested in the management fee instead of the advertising budget which can be varied depending on your appetite for new customers.
Here is the typical breakdown of a Facebook management fee
A one time fee for setup of marketing funnel which includes the following ( $500 - $2000 )
• Audit of current Digital Assets
• Landing page ( Includes hosting and domain purchase )
• Email Automation
• Chatbot Automation ( Optional )
• Initial Graphics and Copywriting
• Ad account setup and Pixels on website
• Facebook Page optimization ( Optional )
A Monthly recurring fee to launch ads ( $1000 base fee for up to $2000 ad spend )
• Ongoing competitor analysis
• Creating multiple ad copies and graphics for A/B testing
• Regular monitoring and optimization of Campaign, Ad sets, and Ads
- The bigger the budget, the more ad copies, and images you need to avoid ad fatigue
- Maintaining a low cost per customer at a higher budget is much harder than a low budget
As your ad budget increase ( That means you are earning more than you spend ), you should see an increase in management fee not more than 15% of your ad spend.
What about the agencies offering me performance-based advertising for Facebook?
Yes, some of our clients have mentioned that there are agencies out there offering a pricing based on Cost per lead generated. You will only pay the setup fee and a monthly fee based on the KPI they have hit for the month.
While this may sound like a lower risk option, we have seen how this model has resulted in many clients coming to sense with the advantages of a fixed monthly marketing retainer instead.
Some agencies we have observed, from talks with our clients, use the idea of lead stuffing.
Lead stuffing is the act of writing their own leads into their client's form from other sources which means the leads have little to no intent in purchasing the client's product.
After all, it's easy to shift the blame on the business owner if he or she does not close the lead in time.
We have seen a client with 90 leads to an event, only 2 turn-ups, and no purchases and she spent a total of $4800 with a reputable agency in their niche.
The moral of the story, running a business comes with managing risk, if there is really a no-risk option, there will definitely be some sort of big compensation later.
So is Facebook Advertising considered expensive or cheap?
Let's rephrase that question, is Facebook advertising effective for your business?
Price should never be the issue for growing your business as marketing spend will always have a return on ad spend if done right.
A man who stops advertising to save money is like a man who stops a clock to save time. Henry Ford
You should see it as exchange $1 for $5 in the near future, and you can continue rolling your marketing campaign with the profits generated from the first campaign to achieve a snowball effect.
But it all starts with finding the best marketing strategy/strategist for your company.
We have found that Facebook advertising does extremely well with B2C products and services. This means as long as your product/service is targetted at general consumers, there is a high chance that you will find success with Facebook Advertising.
If your business is heavily dependant on your customer's needs and not wants, SEM or SEO may be more cost-effective for you.
For Facebook advertising services that will explode your business, click here!